Bloomberg - Evening Briefing - ‘Crisis of confidence’

Silicon Valley Bank’s lack of a chief risk officer for much of last year is being examined by the Federal Reserve as part of its probe of the bank’s failure. SVB revealed in a 2023 proxy statement that Chief Risk Officer Laura Izurieta left the company in October but stopped performing the role in April. The company said Kim Olson took over the job in December. Olson is based in New York, across the country from most of the rest of SVB’s top brass. The San Francisco Fed was the chief regulator for SVB before it fell into Federal Deposit Insurance Corp. receivership on Friday in the biggest bank failure in more than a decade. The Fed has said that it will also conduct an internal investigation of its own oversight, and release the results on May 1. —David E. Rovella

By now most people know why SVB tanked. But why Signature Bank? It turns out the answer is simple: The favorite of law firms and crypto was seized by the government Sunday after regulators lost faith in management. “The bank failed to provide reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership,” New York’s Department of Financial Services said. The collapse—the third-largest bank failure in US history—followed a surge in customer withdrawals on Friday that is said to total about 20% of the company’s deposits.

Moody’s Investors Service placed First Republic Bank and five other US lenders on review for downgrade, the latest sign of concern over the health of regional financial firms following the failure of SVB. Western Alliance Bancorp., Intrust Financial Corp., UMB Financial Corp., Zions Bancorp. and Comerica Inc. were the other lenders put on review.

A First Republic Bank branch in Santa Monica, California Photographer: Lauren Justice/Bloomberg

Three banks collapse in quick succession. The government rumbles in to stanch the bleeding. But depositors are still worried, fearful for their nest eggs. Guess who comes out the winner?

Regional bank leaders are snapping up shares of their companies’ stocks, taking advantage of a selloff fueled by the fallout from SVB. More than 100 executives at lenders across the US, including PacWest Bancorp, Metropolitan Bank Holding and CVB Financial, spent at least $13.9 million combined boosting their stakes, according to data compiled by Bloomberg. 

Credit Suisse Group said it found “material weaknesses” in its reporting and control procedures for the past two years, after questions from US regulators last week. The Zurich-based bank, which has seen turbulent times of late, said Tuesday it will take steps to fix ineffective checks on the process it follows to pull together its financial reports. 

Underlying US consumer prices rose in February by the most in five months, forcing a tough choice for Federal Reserve officials weighing still-rapid inflation against the ongoing banking turmoil in their next interest-rate decision. Just before the crisis came to fruition last week, Chair Jerome Powell had opened the door to re-accelerating the pace of rate hikes, but many economists now say the central bank will either stick with a smaller increase or pause entirely when it meets next week. One shop even says a rate cut could be in store.

Facebook-parent Meta Platforms plans to fire another 10,000 of its employees, bring to 21,000 the number of people the company has terminated in the past six months. It will also eliminate about 5,000 additional open roles. Meta has been marketing 2023 as a “year of efficiency.”

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• SVB is a “nail in the coffin” for the Bay Area housing market.
• Russian fighter jet collides with US drone over the Black Sea.
• The Kremlin built an $80 billion offshore cash pile despite sanctions.
• GOP Governor Ron DeSantis says assisting Ukraine not key US priority.
• Bloomberg Opinion: The US, UK and Australia send China a message.
• Apple delays bonuses and limits hiring in latest cost-cutting effort.
• Florida’s Naples sees rush of new money as city workers get priced out.

Thank the US government for making the Museum of American Finance gathering of Wall Street’s players a normal social evening. Rather than stress-schmoozing in the throes of bank runs and failures, and a rout of financial stocks, the 525 guests gathered Monday night at Manhattan’s Cipriani 42nd Street grasped their bellinis with a sense of relief that regulators had pledged SVB deposits exceeding $250,000 would be safe. 

Virtu Financial co-founder Vincent Viola, center, with wife Teresa and sons, Michael and John. Photographer: Amanda Gordon/Bloomberg

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